Abstract
The growing integration of world capital and goods markets has led to an increasing interest in the validity of international parity conditions. These parity conditions play a key role in the theoretical foundations of different exchange rate models. One important condition with respect to the integration of capital markets and to models of the monetary approach to exchange rates is the ‘uncovered interest parity’ (UIP) hypothesis.1 This states that (under some assumptions) a nominal interest rate differential of bonds denominated in different currencies equals the expected change in the exchange rate. This hypothesis has been tested by several authors for different countries and different time periods, with mixed evidence.2
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© 1993 Stephen F. Frowen
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Kirchgässner, G., Wolters, J. (1993). Uncovered Interest Parity Condition between the United States and Europe under Different Exchange Rate Regimes. In: Frowen, S.F. (eds) Monetary Theory and Monetary Policy. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-23096-9_18
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DOI: https://doi.org/10.1007/978-1-349-23096-9_18
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